Finally, I get to trade. They give me one of four accounts. My account has about 13 million dollars in haircut, which is what they refer to the amount of money the account is using to cover its risk. Skagnetti tells me that my account has a ton of edge in it and will make a lot of money. Cool.
At some point all the new traders, have lunch with the two main partners, Marsellus and his wife, Mrs. Marsellus Wallace. Mrs. Wallace is very stylish, and pretty cool in social settings. After I was eventually sacked she was featured in a fashion magazine layout that boasted that she had spent close to $100,000 on clothes that month.
Marsellus fills us in on the history of the company, and how it was their goal to become the Wendy’s of option trading. I’m not sure why they weren’t going for McDonald’s or Burger King, but essentially after lunch is over I feel like I’m in charge of making French Fries. I thought I was a top flight trader, but I’m really just a guy who dips the fries into the oil and puts salt on them. Do those guys have a lot of job security?
Two weeks later, I’ve barely traded a thing and the following happens. Skagnetti receives a message that a public customer wants to buy a ton of puts in Marsh-McLennan. We own a ton of options in this stock and are short options in basically every other insurance name against it.
When you are long options in a name, you want the stock to move a lot. When you are short options in a name, you want the stock to not move much at all.
I look at the ticker and Marsh-McLennan is plummeting for some reason. I send a note to research, which I mark as urgent, asking if there is news in this stock. While I am doing this Skagnetti sells the customer 1,000 puts and tells out group to sell out every option in the name that we are long. This decision costs our group about 1.5 million dollars by the end of the day.
Elliot Spitzer had announced that he was going after Marsh and the whole insurance industry for fraud. Every single insurance name was down like 10%, and we lost money in every single one of them.
I’m not feeling good about myself as it is, but in two weeks, the book I was given that had a ton of edge in it, that I’ve barely even touched, is down over a million dollars. It’s in no way my fault, but it’s hardly the start I was hoping for.
From that point on Skagnetti becomes even more insane. He institutes like 10 new rules, half of which are completely the opposite of the firms’ standard operating procedures.
Spivey is over across the room drinking coffee discussing Capitalism all day, and I’m working for a guy who hates me, with a book seriously in the red. I’m astonished that my start at this company, which didn’t seem to possibly be able to get worse, has now gotten infinitely worse.
Part 3: Uncle Fester becomes Hero to the Proletariat
